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Unusual Option Opportunities In SunEdison

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According to Options and Volatility, shares of Sunedison Inc (NASDAQ: SUNE) saw unusually high options activity on Wednesday. Notably, the August monthly August 25 calls traded 10,869 contracts versus only 122 open interest. The August 24 puts saw heavy volume as well, with 21,079 contracts trading versus only 247 open interest. The trade was likely done as a strangle, buying 2 puts for every 1 call bought. The total dollar outlay for the trade was roughly $5,000,000.

In addition to the increased volume, the implied volatility on the both the calls and puts increased dramatically. The August 25 calls rose from an implied volatility of $64.71 on Tuesday to $77.54 on Wednesday's close, while the August 24 puts moved in a similar fashion, going from $64.97 to $74.59.

Due to the increased buying pressure and concomitant lift in implied volatility, the price of both the calls and puts rose significantly. With Sunedison closing down $0.25 on the day at $25.55, the August 25 calls actually rose in price, moving from $2.15 on Tuesday's close to $2.29 on the Wednesdays close. The August 24 puts also moved sharply higher as well, moving up $0.31 from $0.94 to $1.21, exceeding the $0.25 drop in the stock.

Sunedison has earnings expected on August 6, but according to Options and Volatility, the earnings are reflected in the August 2 weekly options.

Disclosure: The author has no position in Sunedison at the time of publishing.

Posted-In: Long Ideas Short Ideas Options Markets Trading Ideas

 

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